Shareholders' Deficit | Note 6 - Shareholders’ Deficit Preferred Stock The Company has authorized 5,000,000 shares of preferred stock which have been designated as follows: Number of Shares Authorized Number of Shares Outstanding at December 31, 2020 Par Value Liquidation Value per Share Series AA 1,000,000 25,000 $ 0.0010 - Preferred Series B 50,000 600 $ 0.0001 100 Preferred Series C 8,000 763 $ 0.0001 1,000 Preferred Series D 20,000 305 $ 0.0001 1,000 Undesignated 3,922,000 - - - Series AA Preferred Shares On February 22, 2013, the Board of Directors of the Company authorized an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), in the form of a Certificate of Designation that authorized the issuance of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof. Each holder of outstanding shares of Series AA Super Voting Preferred Stock shall be entitled to one hundred thousand (100,000) votes for each share of Series AA Super Voting Preferred Stock held on the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company. As of December 31, 2020, and 2019, there were and 25,000 shares of Series AA Preferred stock outstanding. Series B Convertible Preferred Stock On February 7, 2017, the Company filed a certificate of designation for 50,000 shares of Series B Convertible Preferred Stock designated as Series B (“Series B”) which are authorized and convertible, at the option of the holder, commencing six months from the date of issuance into common shares and warrants. For each share of Series B, the holder, on conversion, shall receive the stated value divided by 75% of the market price on the date of purchase of Series B and a three-year warrant exercisable into up to a like amount of common shares with an exercise price of 150% of the market price as defined in the Certificate of Designation. Dividends shall be paid only if dividends on the Company’s issued and outstanding Common Stock are paid and the amount paid to the Series B holder will be as though the conversion shares had been issued. The Series B holders have no voting rights. Upon liquidation, the holder of Series B, shall be entitled to receive an amount equal to the stated value, $100 per share, plus any accrued and unpaid dividends thereon before any distribution is made to Series C Secured Redeemable Preferred Stock or common stockholders. There has been no activity during the year ended December 31, 2020 and 2019. As of December 31, 2020, and 2019, there are 600 shares of Series B outstanding. Series C Secured Redeemable Preferred Stock On December 22, 2017, the Company filed a certificate of designation for 8,000 shares of Series C Secured Redeemable Preferred Stock (“Series C”). Each share of the C Preferred is entitled to receive a $20.00 quarterly dividend commencing March 31, 2018 and each quarter thereafter and is to be redeemed for the stated value, $1,000 per share, plus accrued dividends in cash (i) at the Company’s option, commencing one year from issuance and (ii) mandatorily as of December 31, 2019. Management determined that the Series C should be classified as liability per the guidance in ASC 480 Distinguishing Liabilities from Equity On January 29, 2020, the Company filed the amended and restated certificate of designation fort its Series C Secured Redeemable Preferred Stock. The amendment changed the rights of the Series C by (a) removing the requirement to redeem the Series C, (b) removing the obligation to pay dividends on the Series C, (c) Allowing the holders of shares of Series C to convert the stated value of their shares into common stock of the Company at 75% of the closing price of such common stock on the day prior to the conversion. The Series C preferred does not have any rights to vote with the common stock. Upon liquidation, the holder of Series C, shall be entitled to receive an amount equal to the stated value, $1,000 per share, plus any accrued and unpaid dividends thereon before any distribution is made to common stockholders but after distributions are made to holders of Series B. Management reviewed the guidance in ASC 470-60 Troubled Debt Restructurings Debt Modifications and Extinguishments Management determined the fair value of the new instrument based on the guidance in ASC 820 Fair Value Measurement. Management concluded that the preferred stock should not be classified as a liability per the guidance in ASC 480 Distinguishing Liabilities from Equity even though the conversion would require the issuance of variable number of shares since such obligation is not unconditional. Management classified the Series C in permanent equity as of December 31, 2020. For the years ended December 31, 2020 and 2019, the Company has sold 0 and 94 shares of Series C in units comprised of shares of C Preferred and common stock purchase warrants exercisable into up to 0 and 960 shares of common stock for consideration of $0 and $94,000. The warrants resulted in a debt discount after amortization of $0 and $776 at December 31, 2020 and 2019, respectively, and are recorded as a discount to the preferred stock liability on the consolidated balance sheets. During the twelve months ended December 31, 2020, the Company converted 1,051 shares of Series C into 2,754,822 shares of common stock. As of December 31, 2020, and 2019, there were 763 and 1,814 shares of Series C outstanding. Series D Convertible Preferred Stock On November 11, 2019, the Company filed a certificate of designation for 20,000 shares of Series D Convertible Preferred Stock designated as Series D (“Series D”), which are authorized and convertible, at the option of the holder, at any time from the date of issuance, into shares of common shares. On or prior to August 1, 2020, for each share of Series D, the holder, on conversion, shall receive a number of common shares equal to 0.01% of the Company’s issued and outstanding shares on conversion date and for conversion on or after August 2, 2020, the holder shall receive conversion shares as though the conversion date was August 1, 2020, with no further adjustments for issuances by the Company of common stock after August 1, 2020, except for stock split or reverse stock splits of the common stock. The Series D holders have no voting rights. Upon liquidation, the holder of Series D, shall be entitled to receive an amount equal to the stated value, $1,000 per share, plus any accrued and unpaid dividends thereon before any distribution is made to common stockholders. During the years ended December 31, 2020 and 2019, 50 and 255 shares of Series D have been issued. As of December 31, 2020, and 2019, there are 305 and 255 shares of Series D outstanding. Common Stock On December 31, 2018, we entered into a non-transferrable Investment Agreement whereby the investor committed to purchase up to $10,000,000 of our common stock, over the course of 36 months. The aggregate number of shares issuable by us and purchasable by the investor under the Investment Agreement is 81,250. A registration statement for the sale of our common stock related to the Investment Agreement went effective on February 11, 2019. We may draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Investment Agreement. The maximum amount that we are entitled to put in any one notice is the greater of: (i) 200% of the average daily volume (U.S. market only) of the common stock for the three (3) trading days prior to the date of delivery of the applicable put notice, multiplied by the average of the closing prices for such trading days or (ii) $100,000. The purchase price shall be set at ninety-four percent (94%) of the lowest daily VWAP of our common stock during the Pricing Period. However, if, on any trading day during a Pricing Period, the daily VWAP of the common stock is lower than the floor price specified by us in the put notice, then we will withdraw that portion of the put amount for each such trading day during the Pricing Period, with only the balance of such put amount above the minimum acceptable price being put to the investor. There are put restrictions applied on days between the put notice date and the closing date with respect to that particular put. During such time, we are not entitled to deliver another put notice. There are circumstances under which we will not be entitled to put shares to the investor, including the following: ● we will not be entitled to put shares to the investor unless there is an effective registration statement under the Securities Act to cover the resale of the shares by the investor. ● we will not be entitled to put shares to the investor unless our common stock continues to be quoted on the OTCQB market or becomes listed on a national securities exchange. ● we will not be entitled to put shares to the investor to the extent that such shares would cause the investor’s beneficial ownership to exceed 4.99% of our outstanding shares; and ● we will not be entitled to put shares to the investor prior to the closing date of the preceding put. In connection with the preparation of the Investment Agreement and the registration rights agreement, we incurred fees of $20,000. In no event will we be obligated to register for resale more than $10,000,000 in value of shares of common stock, or 81,250 shares. During the year ended December 31, 2020 and 2019, the Company issued 0 and 17,900 shares of common stock in exchange for $0 and $168,343 cash, respectively, pursuant to the Investment Agreement. On May 29, 2020, the Company filed a post-effective amendment on Form RW removing from registration all of the remaining unsold securities with respect to Amendment Number 1 to Registration Statement on Form S-1 filed January 8, 2019 Registration No. 333-229146 and ordered effective February 11, 2019. The shares removed from registration include all remaining shares under the Equity Line Purchase Agreement. On May 18, 2020, the Company and Cavalry Fund I LP (the “investor”) entered into an Equity Line Purchase Agreement (“ELPA”) pursuant to which the investor committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 (the “Commitment”) worth of the Company’s common stock, over a period of 24 months from the effectiveness of the registration statement registering the resale of shares purchased by the investor pursuant to the ELPA. The Company agreed to issue shares of its common stock (the “commitment shares”) to the investor having a market value of 5% of the commitment ($500,000 and 3,859,630 shares) based on the market price of the shares at the execution of the ELPA to be delivered in three tranches of 385,963 shares on: (i) the execution of the ELPA; (ii) thirty days after the effectiveness of the registration statement to be filed under the RRA (the “registration right agreement” or the “registration statement”), and (iii) 90 trading days after the effectiveness of the registration statement with the balance of the commitment shares to be issued pro-rata over the first $3,000,000 of puts in accordance with a formula set forth in the ELPA. The ELPA provides that at any time after the effective date of the registration statement and provided the closing sale price of the common shares on the OTCQB is not below $0.01, from time to time on any business day selected by the Company (the “Purchase Date”), the Company shall have the right, but not the obligation, to direct the investor to buy up to 300,000 shares of the common stock (the “regular purchase amount”) at a purchase price equal to the lower of: (i) the lowest applicable sales price on the date of the put and (ii) 85% of the arithmetic average of the 3 lowest closing prices for the common stock during the 10 consecutive trading days ending on the trading day immediately preceding such put date. The regular purchase amount may be increased as follows: to up to 400,000 shares of common stock if the closing price of the common shares is not below $0.25 per share and up to 500,000 shares if the closing price is not below $0.40 per share. Under the ELPA the Company has the right to submit a regular purchase notice to the investor as often as every business day. The payment for the shares covered by each put notice will generally occur on the day following the put notice. The ELPA contains provisions which allow for the Company to make additional puts beyond the regular purchase amount at greater discounts to the market price of the common stock as forth in the ELPA. The ELPA requires the Company to apply at least 50% of the proceeds of puts to the payment of certain variable rate convertible notes issued by the Company. During the twelve months ended December 31, 2020, pursuant to the execution of the ELPA, the Company issued 771,926 shares of common stock with a fair value of $97,920. The Company does not anticipate that it will raise any funds under the ELPA. During the year ended December 31, 2020 and 2019, the Company issued 14,557,343 and 728,057 shares of common stock, respectively, for the conversion of notes and accrued interest for aggregate fair value of issued common stock of $3,339,109 and $7,533,318, respectively. During the year ended December 31, 2020 and 2019, the Company issued 1,206,398 and 10,340 shares of common stock with a value of $109,800 and $159,850 related to services, respectively. During the year ended December 31, 2020 and 2019, the Company issued 0 and 753 shares of common stock valued at $0 and $12,121, respectively, related to the extension of outstanding notes and lock-up agreements;0 and 1,091 shares valued at $26,545 were issued as additional consideration for the issuance of two promissory notes totaling $0 and $336,000, respectively. During the year ended December 31, 2020, the Company issued 1,234,568 shares of common stock in exchange for $100,000 cash pursuant to Securities Purchase Agreements. During the year ended December 31, 2019, the Company issued 17,900 shares of common stock in exchange for $168,343 cash pursuant to Securities Purchase Agreements. During the year ended December 31, 2020, the Company issued 1,500,000 shares of common stock for total value of $165,000 in exchange for 34,690 stock options regarding the ambiguity of price adjustment in the event of a reverse split that the Company completed on December 20, 2019. During the year ended December 31, 2020, the Company issued 58,428 shares of common stock to Series C with a value of $8,152 to induce the holders to convert into shares of common stock. During the year ended December 31, 2020, the Company issued 2,754,822 shares of common stock with a value of $1,400,934, related to the conversion of Series C. During the year ended December 31, 2020, the Company modified the terms of its promissory note with one investor, which extended the maturity date of its promissory note and the issuance of 500,000 restricted stock with a fair value of $55,000. The recorded of this transaction resulted in a loss on debt extinguishment of $55,000 per ASC 470-60 Troubled Debt Restructurings During the year ended December 31, 2020, in connection with the issuance of a new self-amortization promissory note, the Company issued 355,000 restricted shares as inducement with a fair value of $24,140. During the year ended December 31, 2020, the Company issued 409,000 shares with a value of $58,855 to one investor to exchange one variable convertible note with remaining principal of $283,000 past maturity for a fix rate convertible note with principal of $525,000 and maturing one year from issuance. The Company recorded a loss on debt extinguishment of $151,496 for the fair value of the shares issued in accordance with guidance in ASC 470-50 Debt- Modifications and Extinguishments Stock Options During the year ended December 31, 2020, the Company granted stock options to independent contractor exercisable into up to 3,000,000 shares of common stock with an exercise price of $ 0.15 per share and expiration date of 2 years from the vesting date. The options shall vest in twelve equal quarterly installments so long as the contractor remains under retention by the Company to provide service. The stock options will vest in twelve equal installments of 250,000 shares. These options were valued at approximately $245,900 using the Black Scholes option pricing model. During the year ended December 31, 2019, the Company granted stock options to the Company’s Chief Medical Officer, exercisable into up to 5,280 shares of common stock with an exercise price of from $11.60 per share, and a weighted average remaining life of 3.38 years. These stock options were valued at $76,532 using the Black Scholes option pricing model. The stock options will vest in eight equal quarterly installments of 660 shares. 1,980 options are vested and exercisable in shares of common stock as of December 31, 2020. Per the terms of the agreement, the Company forfeited the 3,300 remaining options due to termination of employment. Share-based compensation expense for the years ended December 31, 2020, and 2019, totaled $57,400 and $31,012, respectively. At December 31, 2020, the total unrecognized deferred share-based compensation expected to be recognized over the remaining weighted average vesting periods of 29 months for outstanding grant was approximately $198,060. The weighted average grant date fair value of stock options issued during the years ended December 31, 2020 and 2019 were $0.08 and $14.49 per share, respectively. Stock option activities for the years ended December 31, 2020 and 2019 are as follows: Options Weighted Weighted Aggregate Outstanding at January 1, 2019 94,553 $ 28.71 2.94 $ - Granted 5,280 $ 11.60 3.38 Cancelled - $ - Exercised - $ - Outstanding at December 31, 2019 99,833 $ 27.81 2.02 $ - Granted 3,000,000 $ 0.15 1.65 Cancelled (85,753 ) $ 23.53 0.68 Exercised - $ - Outstanding at December 31, 2020 3,014,080 $ 0.37 1.67 $ - Exercisable at December 31, 2020 514,080 $ 1.46 1.76 $ - The balance of all stock options outstanding as of December 31, 2020 is as follows: Outstanding Exercisable Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price Options $ 54.00 11,750 6.30 $ 54.00 11,750 $ 54.00 $ 47.00 350 0.12 $ 47.00 350 $ 47.00 $ 11.60 1,980 1.75 $ 11.60 1,980 $ 11.60 $ 0.15 3,000,000 1.65 $ 0.15 500,000 $ 0.15 3,014,080 1.67 514,080 $ 1.76 On June 11, 2020, the Board of Directors approved the issuance of 74,668,000 non-incentive stock options to officers, directors, and key consultants. The key terms and conditions of the award have not been mutually understood and agreed upon, as a result, the Company has not recognized stock compensation for such awards for the year ended December 31, 2020. Warrants During the year ended December 31, 2020, the Company did not issue any warrants. During the year ended December 31, 2019, in conjunction with the conversion of fixed rate promissory notes into Preferred C stock, the Company issued two-year common stock purchase warrants to acquire up to 960 shares of common stock with exercise prices ranging from $14.50 to $27.90 per share. A summary of the status of the warrants granted under these agreements at December 31, 2020, and changes during the years ended December 31, 2020 and 2019 are presented below: Outstanding Warrants Weighted Average Exercise Price Shares Per Share Outstanding at January 1, 2019 77,551 $ 297.92 Granted 960 $ 19.53 Cancelled (5,025 ) $ 122.46 Exercised - $ - Outstanding at December 31, 2019 73,486 $ 306.28 Granted - $ - Cancelled (33,920 ) $ 404.55 Exercised (271 ) $ 44.35 Outstanding at December 31, 2020 39,295 $ 200.72 Exercisable at December 31, 2020 39,295 $ 200.72 Outstanding Exercisable Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price Warrants $ 14.50-50.00 11,286 1.26 $ 31.53 11,286 $ 31.53 $ 51.00-100.00 16,078 1.02 $ 75.59 16,078 $ 75.59 $ 101.25-239.00 4,765 0.82 $ 174.66 4,765 $ 174.66 $ 255.00-480.00 1,062 0.55 $ 320.22 1,062 $ 320.22 $ 562.30-1,000.00 6,104 0.23 $ 842.61 6,104 $ 842.61 39,295 0.93 $ 200.71 39,295 $ 200.72 |